The enormity of the task facing Portugal’s construction sector was painted starkly yesterday at a meeting of APPII, the association of Property Developers and Investors: the country desperately needs around 200,000 homes, but the sector is ‘at its limit’, and can only manage 28,000 this year.
“Twenty years ago, 100,000 houses were built every year. Today, an average of 24,000 to 25,000 new homes are being built, with this year reaching a peak of 28,000. Prices can only be reduced with more supply, but there is no capacity to do more,” APPII CEO Manuel Maria Gonçalves explained during a meeting organised by Diário Imobiliário on the government’s ‘shock measures’ for housing, announced last month.
According to the experts, the main factors aggravating the picture are “excessive” taxation on builders and clients – accounting for up to 40% of the total cost of developments – the slow pace of licensing, and a shortage of labour (the sector ‘lacks’ 80,000 to 100,000 workers*).
For most speakers, the measures announced by the government are “ambitious”, but “not very feasible”.
The long-demanded IVA (VAT) reduction to 6% “is welcome” but, as João Sousa, CEO of the JPS Group, emphasised, “it may only affect new constructions that will be launched in a year and a half to two years’ time.”
Sousa added that this and other measures designed to galvanise the supply of housing tend to “last for the duration of the political cycle” (for example, when the PS ‘lost’ in last year’s legislative elections, measures the administration had brought in to tackle the housing crisis were either superceded/ dropped/ simply not implemented) – a situation that leaves investors feeling “enormous instability”.
Thus, the AD housing package is seen as “brave”, but something that needs to be assured well beyond 2030.
Madalena Azeredo Perdigão, a partner at CCA Law Firm, also pointed out that the new reduced IVA rate for housing worth less than €648,000 still has to be authorised by the European Commission after passing through parliament, which will add to ‘the delays’ before it comes into force.
In short, the government’s new package “doesn’t have shock measures, as we needed them, ” said José Rui Menezes e Castro, CEO of the MAP Group.
“A shock policy would create conditions to make existing housing stock available on the market,” he said – and that is nowhere near happening.
Developers are also questioning the government’s announcement that thousands of new homes will be constructed using funds from the Plan for Recovery and Resilience (PRR) and the European Investment Bank (EIB).
“The numbers are growing daily to make an impact – but there is no capacity to build what has been announced. Each municipality works with the PRR as if it were a micro-enterprise. There’s no global structure that fits everything together at a central level,” said João Sousa.
Nuno Malheiro, an architect, suggested that neither municipalities nor the Institute for Housing and Urban Rehabilitation (IHRU) “have the capacity to take advantage of funds available” anyway, namely those from the PRR, which ends next year. In other words, the promise of funds is seen as ‘dangled’ in front of local entities, but the logistics of going through all the hoops to get them prove much too onerous.
The government has also announced ‘the simplification of licensing’. Speakers yesterday illustrated their experiences with local councils, stressing that reducing response times is not enough.
“The same law is interpreted in different ways by local councils, not to mention the regulations, with their own rules. This makes it difficult and creates insecurity,” said Nuno Malheiro, for whom “simplifying means standardising the rules” in all municipalities.
*Regarding the lack of workers, many companies will also stress that the labour pool they have to choose from is deficient: the workers are not necessarily ‘good workers/ experienced’. Indeed, many can prove liabilities on building sites, which adds to the sector’s problems.
source material: LUSA
